(Montel) West European coal imports looked set to rise by a third this year as buyers rushed to stockpile Russian coal ahead of an EU-wide ban this summer and as power producers attempted to conserve gas ahead of winter, data showed on Wednesday.
“The background for that increase is the strong rise in demand for the restocking of high-quality Russian product before the ban came into force,” said a coal analyst with a European trading firm.
Of the total, Russia would ship around 16m tonnes this year, down 36% versus last year. And supplies from Russia since August – when an EU-wide ban on Russian coal imports was introduced in response to its invasion of Ukraine – have plunged to an average of just 0.13m tonnes/month, likely of just Kazakh coal loaded at Russian ports.
As such, total deliveries from all origins in the first half of the year surged nearly 90% to more than 32m tonnes, while those in the second half would likely slip 1.5%, compared with July-December 2021, to nearly 25m tonnes, the dry bulk data provider’s data showed.
The analyst also cited political decisions to reopen mothballed coal plants or to keep some running for longer amid concerns about winter power supply security – mainly due to sharply reduced natural gas being piped from Russia.
European efforts to curb gas consumption and fill stocks ahead of winter have resulted in “extremely attractive clean dark spreads” for 2022 and 2023, the analyst said.
Indeed, according to Montel’s latest estimates, the clean dark spread – or the profit margin for burning coal to produce power – for a German coal-fired power plant of 36% efficiency in 2023 was around EUR 161.50/MWh, compared with EUR 22/MWh for a 50% efficiency gas-fired plant.
The analyst said total EU thermal coal imports, including to the UK, would likely reach 68.9m tonnes this year, compared with 64.5m tonnes in 2021.
A coal analyst with a Swiss trading house said the DBX figures largely tallied with his own estimates, adding “this is why [European buyers] are so comfortable with stocks at the moment”.
Port stocks were pegged this week at close to two-month highs of around 6m tonnes and some 2m tonnes higher than a year ago, Montel reported on Tuesday.